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TSP Participants Learning, Changing During Period of Market Volatility

TSP Investing

Retired
Department of Labor
Wed Oct 17, 2007 10:06 AM

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Your article is very informative and I agree to a certain point.

One consideration on the outflow of monies form the stock funds could be because many of the Baby Boomers are preparing for exiting the federal government and want to make certain that their money is there.

Also, I retired in February of this year after 37 years at age 59. Prior to my retiring, I had halved my money in G and the rest % in I, S and C. Now, grant you I was still contributing to the TSP. After, over a year, the G fund at the low rate was not that less than the others combined with no RISK.

My conclusion for now, the rates look good statistically ,but the bottom line is the ups and downs do not, in actuality, increase like your simple % indicate.

Value of Dollar

IT Spec
USDA
Wed Oct 17, 2007 6:18 PM

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I do my own mixing of funds quarterly. I look at past history and make an adjustment. Over the last few years the US Dollar has dropped significantly in world markets. As a result the I fund has outperformed both the C and S funds. I've moved 60% of my balance into I and split the rest with C and S. Too Risky? Smart Move? What do you think? I have 15 years to retire.

Have You Bothered To Study The I and S Funds?

Financial Analyst
GSA
Thu Oct 18, 2007 2:13 PM

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Mr. Smith,

Have you ever heard of biased reporting? For that matter, have you ever bothered to study the I and S funds and compare those funds with the L funds-especilly over the past few years?

If anything, you do not provide any service or education about the fact both I and S funds have had tremendous runs - sometimes much higher than the L funds.

While you attempt to, "sell" to your audience, why not provide full analysis instead of "selling" your audience on funds that do not provide top knotch dollars for return?

Re: Have You Bothered To Study The I and S Funds?

Editor
FedSmith.com
Thu Oct 18, 2007 2:27 PM
Yes, I have followed the returns of the TSP funds very closely.

The funds you mentioned have done very well. Many people investing for retirement are uncomfortable with putting large amounts of their money into these funds. Many do not put any money at all into these funds.

They can be volatile--especially in what may be the later years of a bull market.

For these investors, having some money in the lifecycle funds is a way to have the potential of some of these returns but without taking the risk that may be associated with them.

I would disagree that is biased reporting; I thought it was good judgment for people who do not want to take that risk with their retirement to have some exposure but without the significant potential downside to those funds.

Of course, if I had the gift to see into the future, and knew how these funds would do in the future, that would be different. In an uncertain world and with an aging bull market, the L funds are a good alternative for some readers. For those with more confidence, more time until they retire or just want to take more chances with the hope of getting higher returns, the TSP funds do not prevent a person from making that decision and investing accordingly. If that is your preference, best of luck and I hope your returns are substantial!

Re: Have You Bothered To Study The I and S Funds?

manager
dod
Thu Oct 18, 2007 5:54 PM
Financial Analyst, you're incorrect when you say no service has been provided on I and S funds. There have been several Fedsmith articles the past few years specifically addressing their high returns. You're also incorrect in your biased reporting assertion. The L funds are fairly new to the TSP and judging by many reader comments on this site, there are a lot of people who don't know how to use them correctly. The fact that they're new and being used incorrectly by a lot of people merits some attention. That's not bias, that's bringing up a topic that needs to be discussed.

L Fund looks good over time of existance, but...

International Trade Specialist
DOC
Sat Oct 20, 2007 8:47 AM

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I heard the establishment of the L funds was partially in answer to the 1999-2005 (up down slow up) roller coaster. How does the L fund adjust for a possible dive and later upswing in the market? So far, of course, there aren't any returns recorded for a downturn in L because it's too new, and unlike the individual funds we can't look back at the funds it's based on to get some historical reassurance, so not sure I want to switch to a managed fund from trying to ride the roller coaster (even though roller coaster adjusting is a lot of work I'd really like to spend my time not doing).

Re: L Fund looks good over time of existance, but...

Supervisor
dfas
Sun Oct 21, 2007 9:36 AM
The L funds don't adjust for periodic swings. They are based on the fact that over the long term stock funds always outperform bond and cash funds. If you take any 20 year period (including the 29 crash and the 01 crash) you will find that the major stock indexes outperformed cash and bonds 100% of the time.

As that long term becomes shorter (retirement date drawing nearer), bond and cash percentages are increased to limit downside loss.

My Strategy

PO2
United States Navy
Mon Oct 22, 2007 4:47 PM

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Hello, I just wanted to share with you my investment strategy and open it to constructive criticism. I have a large chunk of money in G fund but most of my money is split between the S and I funds. I check your site every so often to see what percentage each fund is at. If the S or I fund is really down, then I transfer money from the G fund and buy the stocks for much cheaper. Is this a decent strategy or should I just take all of my money out of the G fund (Note: I still have 16 years until retirement)?

Re: My Strategy

Supervisor
dfas
Mon Oct 22, 2007 7:09 PM
With your time frame I would take most (if not all) of your G fund money and put it in C,S and I. Consider and even split between C,S and I for your TSP. Over the long term stock funds always outperform cash funds (and 16 years is long term). Once you get get inside 10 years from retirement think about gradually shifting some from C, S and I to the F fund.

Re: My Strategy

IT Analyst
GAO
Wed Oct 24, 2007 4:12 PM
Or even better, take your money out of the G fund and put everything into the appropriate L fund for your targeted retirement date. Switching funds to try to beat the market is very time consuming and for most of us, not a good idea.

Placing your money in the L fund means that your money will be allocated in all the other funds according to your targeted retirement date and will automatically adjust over time so that over time (from high risk/high yield to lower risk/lower yield). But don't take my word, read the following article:

http://money.cnn.com/2007/10/22/pf/retirement/revell.moneymag/index.htm?postversion=2007102414

Oil Prices

MDW
USDA Forest Service
Thu Nov 1, 2007 11:14 AM

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Oil, War & the politics of the middle east (what's new?) are a major factor that concerns me about the future of the stock market. If Iran is bombed, oil prices could go thru the roof. US energy consumption (oil) continues to rise, with no end or solution in sight. This potential crisis that is on the horizon, keeps me bearish (G fund) as I believe it is not if but when. Between now & the election, this crisis could either pass or occur & so I am not optismistic about the next 15 months. Am I overly pessimistic?

TSP Day Trading

Lead Systems Engineer
NSA
Wed Nov 21, 2007 6:32 AM

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I am sure that you did plenty of research to get all of the numbers in this article. The one number that I do not see is the administration cost as a percentage of the entire fund. Most of us day traders would be more willing to pay a dollar a trade or a small amount per year ($25 or so) to be able to move our money around. This is one of the only ways that a FERS employee can get a decent retirement, by taking full advantage of the TSP. If we are restricted to only a couple trades and get stuck in the wrong funds, we could be making less than 4% interest, as the C-fund is getting right now. By moving my money around and studying the market, I am able to increase that to almost 18% for 2007. Please voice your opinion to not let them take one of my few benefits away.
Thanks,
Rick

Total Comments: 28
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